1. The issue at a glance

"Power without responsibility – the prerogative of the harlot through the ages," complained Conservative leader Stanley Baldwin in 1931. He was referring to press campaigns run by the owners of the Daily Express and Daily Mail, the lords Beaverbrook and Rothermere, who wanted the Tories to support free trade throughout the British empire. But if that controversy has long since faded, Baldwin's famous saying has not, because the debate about the power of the press has persisted.

British newspapers.

Newspapers, unlike broadcasters, have not been regulated by a statutory body since licensing was abolished in 1695. Post-second world war, successive royal commissions and public inquiries have recommended the creation and limited strengthening of the so-called system of "self regulation" to handle complaints from the public and create industry standards. Under self-regulation, publishers of newspapers (and magazines) collectively created a body – now the Press Complaints Commission (PCC) – to adjudicate on behalf of unhappy subjects of press coverage and set an industry code of practice.

However, critics say the PCC is weak compared to powerful publishers, and that its activities are limited in scope. Many issues, such as privacy or libel, are left to the courts – and many people prefer to go the courts to seek redress rather than use the PCC. Some argue that self-regulation is a flawed concept in an era when there are specialised statutory regulators covering almost every other profession, from medicine to the law.

2. Why is it being talked about now?

Rupert Murdoch. (PA)

Lord Justice Leveson's report will conclude a 16 month public inquiry into "the culture, practices and ethics of the press". His inquiry – the sixth since 1945 – was set up by David Cameron and Nick Clegg in the wake of the revelation that the mobile phone belonging to the missing schoolgirl Milly Dowler had been hacked by the News of the World. That demonstrated that phone hacking, as conducted by the News of the World, appeared to be far more widespread than had been previously admitted. It also raised the question as to why politicians, police and the PCC had failed to investigate it more thoroughly when the first allegations of News of the World hacking were raised by the Guardian in July 2009. Critics of Rupert Murdoch's News Corporation, the owner of the now-closed News of the World, argued that the power of his company was so great that ministers, chief constables and regulators were unable to stand up to him.

The Leveson inquiry is a wide-ranging exercise aimed not just at News Corp's newspapers but the press as a whole. It will examine relations of power between the press and the public, politicians and police. And it will make recommendations on how press regulation should be reformed: whether to introduce some sort of statutory regulation or whether to argue for beefing-up the existing model of "self-regulation". Meanwhile, a fierce debate has broken out within Westminster and the media as to what the most appropriate model of reform could look like.

3. A brief history of press regulation

The Examiner (British Library)

Newspapers in England date back to the early 17th century, a time of conflict framed by the civil war. A freer period of publication during the conflict was followed by a period of licensing adopted by Cromwell and followed during the Restoration. However, licensing ended in 1695 when parliament decided against renewing the relevant act, paving the way for a free press. Berrow's Worcester Journal, Britain's longest-surviving newspaper, dates back from this time, appearing occasionally after 1690 and regularly from 1709. There has been no statutory regulation of the press since, although radio and television broadcasters have long been licensed – partly because the transmission spectrum is scare and needs to be managed, and partly due to the power perceived to be inherent in those media.

Newspapers rapidly grew in number, and gradually national newspapers emerged, with the Times being founded in 1785. Expansion of the press continued until the 1950s, when sales peaked, its dominance gradually being eroded by the popularity of television and the competing BBC and ITV network. Under the postwar Labour government the first royal commission, headed by Sir William Ross, recommends the establishment of the Press Council. Incremental changes followed: a second royal commission in the 1960s recommended the appointment of lay members to the Press Council. But none of this had much impact on an increasingly aggressive tabloid culture. At their worst some papers displayed a cavalier regard for accuracy, as seen in the notorious Hillsborough coverage of Kelvin MacKenzie's Sun, but also in exposing politicians' sexual and other indiscretions.

Politicians failed in a bid to introduce a privacy law in the late 1980s through a private members bill and instead a committee under Sir David Calcutt QC was set up. This was the period when politician David Mellor (later himself a victim of press exposure) memorably warned that the press was "drinking in the last chance saloon". Calcutt concluded that the press had one last chance to ensure "that non-statutory self-regulation can be made to work effectively. This is a stiff test for the press. If it fails, we recommend that a statutory system for handling complaints should be introduced."

Calcutt's first inquiry led in 1991 to the creation of the PCC, the successor to the Press Council and – for the first time – the creation of an industry code of practice. Publishers and editors agreed to fund the PCC on an arm's-length basis. However, reviewing the progress of the PCC, Calcutt concluded in 1993 that it was not an effective regulator and recommended the introduction of a press complaints tribunal, backed by law. But the Major government failed to introduce that, and Tony Blair, entering government, concluded there were more important tasks than introducing a press law.

4. How is the press regulated now?

Dowler family. (PA)

Self-regulation and the PCC has continued, but the authority of the regulator was fatally undermined by the News of the World phone-hacking saga. The PCC's initial investigation into the Guardian's investigation concluded there was "no new evidence" of phone hacking by the News of the World beyond the activities of a single reporter, Clive Goodman, and that there was "nothing to suggest that the PCC was materially misled" in an earlier 2007 inquiry. The regulator chose to criticise the Guardian, saying its story "did not quite live up to its dramatic billing". But in the wake of a string of further phone-hacking revelations, culminating in the Milly Dowler story, the PCC was forced to withdraw its report and admit it had been misled by News International. Self-regulation, as represented by the PCC, was seen to have been discredited, and politicians, the press, and even the PCC itself acknowledged that some sort of reform was necessary.

5. What does Leveson have to do?

The British press operates in a constitutional vacuum, circumscribed by the general laws against bribery, libel, and intercepting communications. But there are no specific laws to either protect or regulate the press; there is nothing to match the US constitution's first amendment guarantee of free speech (although the 1689 Bill of Rights does protect free speech in parliament – the antecedant of parliamentary privilege). Lord Justice Leveson at one point suggested parliament could legislate to introduce such a right, which could balance the introduction of some form of statutory regulation, either the underpinning of an independent regulator or a full-blown statutory regulator similar to Ofcom.

However, the prospect of statutory intervention terrifies and angers the British press. Newspaper owners and editors frequently argue that anything that looks like statutory regulation could amount to the censorship of free speech. Even a bill aimed at something more innocuous, such as a freedom of speech guarantee, could open the possibility of negative and hostile amendments from parliament. But Leveson has to come up with a system that will cover the whole of the press, whether voluntary or mandatory.

6. Options and key arguments

Self-regulationDetailed proposals drawn-up by Lord Hunt and Guy Black in consultation with the national and local press to handle complaints, with powers to undertake investigations for the first time

Whereas the PCC is currently run by newspapers, the new model increases the number of lay members; no legislation is required; it will be seen as more independent and membership of all newspapers is encouraged via long term contracts

It is an incremental change from the discredited PCC model; it gives power to a “finance body” composed of key figures from the industry; it is not independent enough to satisfy victims of past press intrusion; there is no guarantee that all publishers, particularly Richard Desmond, will sign up

Independent regulationSimilar to Hunt/Black self-regulation plan with an independently appointed chair, and few or no serving editors as part of its membership

Legislation still not required, with membership enforced via a long-term contract

Lack of public confidence due to lack of legal backup; does not solve the problem of a publisher who refuses to sign up; unclear if it can operate as an alternative to courts, meaning wealthy individuals can still sue for libel or take privacy actions

Some newspapers, including the Financial Times and the Guardian; Evgeny Lebedev, owner of the Independent and Evening Standard; Ed Miliband, Labour party leader; probably Nick Clegg, deputy prime minister; possibly David Cameron, prime minister

Judicial regulationSimilar to independent regulation, but with regulator overseen by legal panel appointed by lord chief justice that could hear appeals

Would be truly independent of both the press and politicians

Would put the power in the hands of the judiciary

The Times

Statutory underpinningLegal recognition for the PCC replacement, providing statutory support

Statutory support would be seen as a strengthening of the body; could also be used to help reduce the costs of legal actions for newspapers who sign up to the new PCC, and help create a low tribunal system to handle complaints previously seen by the courts

Would require legislation giving politicians new powers over the press, which could be hard to pass; risk of Commons or Lords throwing in further amendments that could impact freedom of press (given how many politicians have had run-ins with the media)

Statutory regulationA licensing system with an official regulator with legal powers modelled on Ofcom, which regulates the broadcasters

Broadcasters remain independent of government despite statutory regulation and licences; ITV’s Jimmy Savile scoop shows TV news can break big exclusives as well as newspapers; Ofcom’s complaints system is well used and accepted by public

Licensing model gives government theoretical power to take away a licence; parliamentary passage likely to be fraught; statutory regulation creates unwelcome global precedent, particularly in countries where state threat to journalists is much greater

Graphic: how the Hunt/Black model could work. (Click for larger image)

7. What about the internet?

Leveson's remit was clear, but in one sense narrow. It was to inquire into the the "culture, practices and ethics of the press" – it made no reference to the internet. Various witnesses argued that was something of a mistake, saying that they believed there was a real risk that Leveson would recommend a greater regulatory burden to be placed on the British press, and so creating greater opportunities for unregulated websites to take advantage.

Paul Staines.

The inquiry did not chose to examine the realities of online publishing, although Leveson scored one notable success when Paul Staines, the publisher of the Guido Fawkes site, decided that he would not defy the judge and took down an early draft of Alastair Campbell's witness statement as ordered – even though Staines's site is based offshore and he could have tried to claim he was outside the inquiry's jurisdiction.

The, result, though is that many questions could remain unanswered. Should news and gossip websites be regulated along the lines of whatever emerges for the press? What about high-profile tweeters with thousands of followers – individuals whose remarks are more widely read than some online news? What about English language news providers from abroad, operating under the constitutions and conventions of their own countries? Once Leveson's report is digested, a fresh debate will begin about how far regulation is practical in the internet age. But don't expect there to be much appetite for a second inquiry.

8. What happens next?

Lord Justice Leveson will issue his report on Thursday, but it will not be for him to implement it. If new legislation is recommended, and the government is willing, then it will fall on ministers to introduce the statute required. But the press is strongly opposed to statutory reform, and the Conservatives are split between those who oppose any statute and those who support a modest form of legislation. So, either way, it will fall to the press itself to create a reformed regulator and to chance its own culture and practices.

It is unclear exactly how the prime minister will react, but one outcome being canvassed is that the coalition gives the press time to come up with a reformed PCC, and leaves hanging over the industry the threat of statutory Ofcom regulation if Britain's highly politicised and factionalised newspapers cannot agree. A noisy few weeks is expected as campaigners, politicians and the press itself fight to introduce the model that they want. The precise outcome is far from certain – but nobody believes that the status quo is an option.